Bulls return to the ring with vengeance

TECHNICALS

The markets opened on a cautious note and proceeded to trade higher through the day. The benchmark indices gained about 1.5 per cent as the bulls returned to the ring with a vengeance. The traded volumes were poor as the retail participation was wanting.

The market breadth was highly positive as the BSE and NSE combined figures were 2093: 949 and the capitalisation of the breadth was also positive.

The F&O data for the previous session indicates a bullish bias as the net long positions rose by 2 per cent.

The indices have risen albeit with poor volumes. That the market breadth was positive is a bullish indicator. The poor participation is partly due to scepticism and partly due to a wait and watch approach as the major external trigger is awaited soon.

The 3173 upside resistance specified yesterday was convincingly overcome as the Nifty spot closed above it's congestion threshold of 3208.

That is a bullish indicator for the absolute short term. The coming session will see levels of 3252.69 on advances and the 3172.11 level on declines. Traded volumes and open interest need to perk up significantly to signal a fresh buying impetus.

The outlook for the markets on Wednesday is that of continued optimism, though the undertone is likely to be laced with caution.

Banking and energy stocks are likely to remain in the limelight as the focus is on these scrips in the near term. As long as the Nifty remains above the 3208 threshold throughout the session on Wednesday, the immediate outlook remains bullish. All long positions should be held with a stop loss at the 3184 on the Nifty spot.

Vijay L. Bhambwani
(CEO- BSPLindia.com)

The author is a Mumbai based investment consultant and invites feedback at vijay@BSPLindia.com or ( 022 ) 23438482 / 23400345.

SEBI disclosure: the analyst has no exposure to the scrips mentioned above.